Landlords serving three successive notices to remedy alleged breaches of covenant – Each notice followed by notice to quit – Tenant challenging notices – Arbitrator finding first and second notice invalid but third notice valid – Tenant appealing – Whether time for compliance reasonable – Whether first notice impugned by conduct of council – Appeal dismissed
In 1962 Lancashire County Council, the defendant landlords, let a 72 acre property, Pollards Farm, Hutton, Lancashire, to the claimant tenant. By clause 4(13)(i) of the tenancy agreement, the claimant covenanted to use the holding “primarily as a Dairy and Mixed Holding”, and by clauses 4(20)(b) and (21) agreed not to use it for any purpose other than “agriculture”. However, from the outset, the claimant used part of the holding for importing, processing, packaging and selling milk and fruit juices that were not produced on the holding (the importation activities).
The council served three successive notices on the claimant to remedy the alleged breaches of the covenant. These notices were purportedly served under Case D of Part 1 of Schedule 3 to the Agricultural Holdings Act 1986. The first notice, dated January 1994, required the importation activities to cease within 12 months. The second notice, dated October 1994, required the alleged breaches to be remedied within three months. The third notice was dated November 1994 and required the alleged breaches to be remedied within 12 months. Each of the notices to remedy was followed by a notice to quit. The claimant challenged all three of the notices to quit, and an arbitrator was appointed.
The arbitrator found that: (i) the first notice to remedy was invalid since it did not specify the breach of covenant relied upon. He also found that it was invalid because the 12-month period it specified had been “impugned”, in that the period for complying with the notice was to be treated as having been suspended until November 1994; (ii) the second notice was of no effect because three months was too short a period in which to remedy the breach; and (iii) the third notice was valid and he rejected the claimant’s argument that 12 months was too short a time in which to remedy the breach.
The claimant then issued proceedings seeking the removal of the arbitrator for misconduct, and an order setting aside or remitting the award on the grounds of misconduct and/or for error of law on the face of the award. In particular, the claimant argued that the arbitrator had failed to consider the circumstances, as they had existed, at the date of the third notice, namely, an increased turnover in productivity at that time. The county court dismissed the claimant’s applications, only differing in its conclusions to those of the arbitrator in deciding that the first notice was not impugned, as the conduct of the council had not amounted to clear and unequivocal representation that the first notice would not be enforced. The claimant appealed.
Held: The appeal was dismissed.
1. The arbitrator had been required to consider the time scale for compliance with the third notice to remedy, by reference to the circumstances prevailing in November 1994. However, there was no evidence to show that an increase in the volume of the importation activities would make it more difficult and time-consuming to dismantle the operation. An increase in turnover did not necessarily mean that it would be more difficult for the claimant to relocate. Neither was it odd that the arbitrator had failed to mention this consideration; the likelihood being that he had considered it and decided it was not a relevant factor.
2. The arbitrator had erred in finding that the 12-month period specified in the first notice had been “impugned”. The council’s conduct towards the claimant did not and could not justify the conclusion that their conduct amounted to a representation that they would not insist upon the strict operation of the notice to remedy. The most that could be implied from the conduct of the council was that they represented that they might not insist on enforcing the notice to remedy. Such a representation could not form the basis of an estoppel, nor give rise to an equity in favour of the claimant that enforcement of the notice would be suspended. Hughes v Metropolitan Railway Co [1887] 2 App Cas 439, Dun and Bradstreet Software Services (England) Ltd v Provident Mutual Life Assurance Association [1998] 2 EGLR 175, considered.
Derek Wood QC and Joanne Moss (instructed by Napthen Houghton Craven, of Preston) appeared for the claimant; Paul Morgan QC (instructed by the solicitor to Lancashire County Council) appeared for the defendants.
Thomas Elliott, barrister
